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In this section |
Identifying and listing the penalty charges When you have all your statements or other relevant information from the bank, go through them all carefully and identify what are penalty charges. These are as follows: • Charge made because you went overdrawn without permission or exceeded your agreed overdraft limit. This may be shown as "unauthorised overdraft" or "paid referral fee" which means that the bank paid an item that took you over your limit. These charges may be imposed as a monthly fee, i.e. once in a month for exceeding your limit; or daily for each day that you over your limit. These charges can be from £20-30 for a monthly charge; from £8-30 for a daily charge. Sometimes the bank has a maximum number of daily charges that it applies in a month, e.g. Barclays maximum 3 times £30; others have no maximum. • Unpaid items: this may be an unpaid direct debit (where another organisation has tried to debit your account, but your bank returned it unpaid because of lack of funds; an unpaid cheque (bounced cheque) where the bank returned your cheque because of insufficient funds in your account; unpaid standing order, as above. These charges are shown as charges for each item unpaid. There may be several in one month or even on one day. They may be charged as they occur, or in a batch at the end of a month. • Card misuse: this is where a cheque has been written and guaranteed with a cheque card, but it takes you over the overdraft limit. The bank is obliged to honour it, but they will charge you a fee for "card misuse" - this may be in addition to other charges. Note that you cannot claim back charges that were imposed for services, e.g. if you have an account with a regular monthly charge, a so-called "premium" account where you get something extra such as a personal contact at the branch, free travel insurance etc.; a charge made when you asked the bank to stop a cheque is a charge for a service; a charge for using an ATM machine in a shop is a charge for a service. When you have identified all the penalty charges made to your account, list them either manually or using a spreadsheet showing for each one: date, description of charge, amount. Interest As a general rule, you cannot claim back the interest that a bank has charged you on your overdraft however extortionate the rate of interest may seem. However, you can claim interest on the penalty charges that the bank has imposed at a statutory rate of 8% per annum (0.022% per day) simple interest from the date that the charge was imposed until the date of the claim (and thereafter at the same rate until the claim is paid). The calculation of this interest is complicated but can be done using a spreadsheet. Sample spreadsheet A sample listing of charges and the interest calculation can be downloaded at: Save the spreadsheet on your computer and substitute your own figures in the charges section. Change the date at the top right and the spreadsheet should recalculate the correct interest amounts for your charges. Claim for additional damages You are unlikely to succeed in a claim for damages over and above the refund of the charges plus interest. I tried a claim for mental distress in a claim against Abbey. Quite justifiably I thought because of the way that Abbey had treated its customer and because of the misery and inconvenience that it had caused. However, Abbey paid back the charges in full (less than 24 hours before the court hearing), but sent a barrister to court to defend the additional claim – and the judge threw out my claim for damages. So, I would generally not recommend trying to get additional money on top of the charges. |
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Published and promoted by Bob Egerton, TR2 4RS |
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